Country Size and the Trade Effects of the Euro

Description

This paper investigates whether small countries gain relatively more than large countries from an ‘expansion’ of their market through the creation of a singe currency. The introduction of the Euro offers a particularly valuable source to test this hypothesis, which we motivate using the theoretical model by Casella (1996). Our results from a panel data
analysis, using both aggregate and disaggregated trade data, point to a statistically significant but quantitatively moderate small country bonus. On average, the Euro has led to an improvement of the small Euro area’s relative export performance by 3 to 9 percent.

Period	23 May 2008 → 24 May 2008
Event title	Annual Meeting of the Austrian Economic Association NOeG 2008
Event type	Unknown
Degree of Recognition	National